GMAP Merger Control Minute June 2016
Ukraine: Increased thresholds now in force!
Reforms to Ukraine's merger control regime came into effect on 18 May 2016 and apply to transactions completed on or after that date. The amendments abolish the existing 35% market share threshold and increase turnover thresholds, which are now triggered if:
- the parties' combined worldwide turnover or assets exceeds EUR 30 million (up from EUR 12 million) AND domestic turnover or assets of each of two parties exceed EUR 4 million (up from EUR 1 million which could be met by one party alone) OR
- target's domestic assets or turnover exceeds EUR 8 million AND buyer's worldwide turnover exceeds EUR 150 million OR
- in the case of the establishment of a JV, domestic assets or turnover of one of the parties exceeds EUR 8 million AND worldwide turnover of the other party exceeds EUR 150 million.
Thresholds are calculated at group level and include entities related by control. Not only do the changes include increased thresholds, but it is now essential that at least two parties have or the target has turnover or assets in Ukraine exceeding the threshold. Previously, it was sufficient for only one party to have turnover or assets in Ukraine exceeding EUR 1 million in order to trigger the filing requirement.
The changes also include a new pre-consultation mechanism with the competition authority and a simplified fast-track review procedure of 25 calendar days for qualifying transactions (for example, where only one party is active in Ukraine).
Further procedural changes were approved by the authority on 19 May 2016. Although not yet registered or published, these changes are expected to significantly simplify the preparation and review process for unproblematic transactions, and will enter into force immediately on publication.
Oksana Simonova, head of Baker & McKenzie's competition practice in Ukraine says, “These are positive changes which bring Ukraine's merger control regime more in line with the EU regime and also International Best Practice. We expect the number of deals which are subject to clearance in Ukraine to substantially reduce, allowing the authority to concentrate on transactions which may have a material impact on competition in Ukraine.
Chile: Update on reform proposals
Chile awaits the imminent passing of a bill under which a new merger control regime will be established. The proposals, which introduce a mandatory notification procedure (replacing the current voluntary system), are expected to come into force in 2016. The proposals also include:
- an obligation to suspend closing prior to clearance
- a two-phase review period of 30 business days (for initial review) and 90 business days (where in-depth review is required)
- fines for failure to notify / unauthorized completion of approximately US$ 15,000 per day.
Turnover thresholds triggering a filing obligation are yet to be determined.
Rodrigo Díaz de Valdés, head of Baker & McKenzie's competition practice in Chile, says, "The changes bring the Chilean regime in line with other developed merger control regulations (including the US and the EU). Fixed thresholds and deadlines will give parties a clear indication as to when filing is necessary and appropriate, whilst setting expectations for the procedural timeline. It is crucial however that filing thresholds are set at a reasonable level to avoid imposing onerous requirements on transactions which present no threat to competition."
India: Increased thresholds and renewal of de-minimis exemption
On 4 March 2016, India’s Ministry of Corporate Affairs published changes to its merger regime. Changes include:
- increased thresholds triggering a notification (click here to read in full) and
- renewal of the de-minimis exemption with higher thresholds, meaning that a notification can be excluded if the target's domestic asset value is less than INR 3.5 billion (USD 52 million) – up from INR 2.5 billion, or the target’s domestic turnover is less than INR 10 billion (USD 149 million) – up from INR 7.5 billion.
It is expected that increased filing thresholds and the renewal of the de-minimis exemption will result in a decline in the number of notifiable transactions and a more targeted merger control regime.
The new thresholds came into force on 4 March 2016.
Italy: Increased filing thresholds
On 14 March 2016, the Italian competition authority published new merger thresholds. A filing is triggered if:
- the combined domestic turnover of all parties exceeds EUR 495 million (up from EUR 492 million); AND
- the domestic turnover of the target exceeds EUR 50 million (up from EUR 49 million).
Sector specific thresholds apply in the banking, insurance and media sectors.
The new thresholds came into effect on 14 March 2016.
Latvia: New filing thresholds in force from 15 June 2016
On 12 May 2016, the Parliament of Latvia adopted changes to its competition law (including merger control). The amendments abolish the existing market share threshold (of 40%) and reduce turnover thresholds, which are now triggered if:
- the parties’ combined domestic turnover is at least EUR 30 million (down from EUR 35.5 million) AND
- domestic turnover of each of at least two parties is at least EUR 1.5 million (down from EUR 2.1 million).
The competition authority will also have a right to require notification up to 12 months after closing (even if thresholds are not met) where:
- the parties' combined market share exceeds 40% in the relevant market; AND
- there is a reasonable suspicion that the transaction will result in the creation or strengthening of a dominant position, or that competition will be significantly reduced in the relevant market.
Parties may choose to voluntarily notify if they are concerned the authority will require a post-closing notification.
Fines for failure to notify / unauthorized completion are up to 3% of a party's annual turnover. It is not yet known whether worldwide or domestic turnover is taken into account.
The changes will come into force on 15 June 2016.
Philippines: Implementing rules in force from 18 June 2016
On 3 June 2016, the Philippine competition authority published the implementing rules and regulations of the Philippine Competition Act of 2015.
The new rules mark the final stage of the development of the country’s first comprehensive antitrust regime, with the obligation to obtain merger control clearance now an essential consideration for both local and international parties.
Under the rules, a filing is triggered where:
- annual turnover in, into or from the Philippines, or value of assets in the Philippines of at least one party (buyer or target, including their group) exceeds PhP1 billion (approximately USD 21.5 million) AND
- the value of transaction exceeds PhP 1 billion. Calculation of this threshold depends on the location of the target assets (read here in full).
The rules will come into force on 18 June 2016.